The fallibility of chip and pin

It was introduced back in 2004 and heralded as a fraud-smashing new approach to safely paying for goods and services. Like an impenetrable rock.

The swish-swoosh of elaborate signatures – because we all thought the more complex the style, the harder it would be to forge – became a traditional gesture. The strip on the back of cards for our names still exists, but the signature we put on it, is to some extent, redundant.

By 2005 it was viewed as a groundbreaking step forward, evidently doing its job and doing it well. The UK Payments Administration Ltd, which was then known as the Association for Payment Clearing Services, reported that chip and pin had cut plastic card fraud by 13 per cent.

It was validation.

However, flaws in the system have been identified. Last year seemed to be a particular milestone in changing perceptions. The conversation in the information security and risk management industry about the shortcomings of chip and pin was becoming louder.

Chip and pin was meant to do away with skimming – where cards are swiped. In March of this year, Italian specialists explained that EMV (Europay, MasterCard and VISA) cards “talk to” payment terminals, which fraudsters can now read if they install skimming devices on such outlets.

They can even do this on a pin terminal, after which a “clone card” can be produced. The myth that chip and pin is a rock of security has been broken.

More worryingly, researchers at Cambridge discovered that it was possible for perceptive criminals to commit fraud without needing a pin.

They dubbed this the man-in-the-middle attack. Naturally, they didn’t release too much information, but the basic premise follows.

For one, the fraudsters are au fait with the intricate details of the chip and pin system – call it insider knowledge if you will. Secondly, they must have external hardware capable of pulling off such a scam – which can be done remotely.

“Essentially what it does is to exploit a flaw in the chip and pin system,” Dr Saar Drimer, who was part of the research, told the BBC at the time.

“It makes the terminal think the correct pin has been entered, and the card thinks the transaction was authorised with a signature.”

Of course, like any security system, nothing is absolutely fool proof, but chip and pin was brought in to be a radical alternative. In some ways, with the weaknesses identified, it has lost its ability to sit smugly at the top of the security tree. It’s now just another payment system, prone to attack.